Advertising on Social Networking Sites

After reading through the articles "Advertisers Face Hurdles on Social Networking Sites" and "Why Advertising is Failing on the Internet", it seems that there are a multitude of difficulties that advertisers face in the online world.  Members of social networks use them to keep up with their friends, not to keep up with brands.  This makes the ads be perceived as obtrusive to users and they ignore them.  This perception of ads can be projected onto the products being advertised and cause consumers to gravitate away from using those products.  When consumers are searching on Google, consumers are often in the mindset to make a purchase and the perception of the ad is not as negative on their platform.  Personally, it seems to me that Facebook has taken the approach of making ads more aggressive instead of more entertaining.  I think that eventually Facebook will find that the ads are detrimental to the user experience on Facebook and will eventually reduce their user base. 

Business Model Canvas - Pinterest

Pinterest can create a profitable business model by connecting their primary customer segments: the mass market and online retailers.  Pinterest offers the mass market a venue to conveniently compile custom visual inspiration from entire web.  The value proposition they offer to online retailers is product exposure to the mass market, which can lead to sales.  The value propositions get delivered to their relevant customer segment through the Pinterest website.  The problem is that Pinterest is not getting compensated for the traffic they deliver to other websites.  This is not a new business model, but a working one that Pinterest needs to implement.  This is where the key activity of developing partnerships with online retailers becomes vital. Essentially, Pinterest allows the mass market a venue to create their own personalized boards of ads that they want to see.   Pinterest’s task is to connect each pinned image to an online retailer where that item can be purchased.  Pinterest’s business is to help people materialize their pins.  For each referral that Pinterest sends to an online retailer that results in a sale, Pinterest should receive a percentage of that sale.  They can augment these sales by partnering with key opinion leaders in the fashion / design fields and employing them to create pin boards that users follow and make purchases from.  A key activity for Pinterest is to improve and add more functionality to their website since this is the channel for delivery of value propositions to consumers.  Thus, their key resource is intellectual in nature.  With 48.7 million users, it is easy to see that Pinterest has a high potential for profits by employing the right business model.  

http://expandedramblings.com/index.php/pinterest-stats/

Googlenomics

In the Googlenomics article, I found Google’s concept of auctioning their ad space to be very interesting.  Although I’m not privy to the details of their methodology, the general concept of letting the person have it who wants it the most makes a lot of sense.  Also, their concept of charging only one cent more than the next highest bid takes away the risk of costly overbidding errors to the consumer and really makes the model successful.  As the article stated, this concept results in higher bids on average!  In thinking of other places where this concept could be applied, I immediately think of resourcing R&D projects.  Right now in my position as a team leader, I collaborate with my manager on the who and the when of project resourcing within my small team.  It makes me wonder what would happen if we had a Craigslist of projects and the people who wanted them the most got them rather than management making the decisions.  I know that at least the engineers would enjoy seeing what is out there, what is important, and if they have the freedom to work on what interests them, I think it would make for a happier and more productive department!

Final week of X501

This week, being the last week of the class, is a bit of a heavy week.  We have our team marketing assignment to finish up and submit, the last business model canvas, and lots of material to dig into.  Aside from the required reading and viewing, I’d like to look into the article about “why advertising is failing on the internet” and “advertisers face hurdles on social networking sites”.  I have heard that advertising is not successful on Facebook like it is on Google, so I’d like to better understand why and when it works and why and when it doesn’t.  

Cook Medical Business Model Canvas

The business model canvas I created was for Cook Medical, the company for which I currently work.  The value proposition that Cook provides is a large variety of simple, reliably designed products from a trusted brand that get the job done.  One of the key resources of the business is the large, skilled sales force.  They maintain customer relationships through face-to-face personal assistance which results in revenue from product sales and key partnerships for intellectual property / new product development.  The key activities of Cook’s business are R&D and supply chain / operations management.  If Cook doesn’t make the products that its customers want, then there is no business.  If Cook doesn’t have success moving materials from vendor to production to distributors to hospitals, then there is no business.  The obvious key customer segments are hospitals and private practices and they generate revenue through product sales because of the value propositions.  The not-so-obvious customers are other medical device companies.  They generate revenue for Cook through product sales (for example, including a Cook component in one of their sets) and through licensing fees (for example, Cook might receive a 6% royalty on each product a competitor sells due to patents).  The value proposition that creates this revenue is the product design.  The concept of licensing fees is present in Cook’s cost structure as when we produce products where other companies or universities own the patent involved.   The sales force, physicians, operations and R&D are highly connected in all aspects of Cook Medical’s business model canvas. 

History of the Internet

I read through some of the history of the Internet article written by the Pew Internet and American Life Project, and found the predictions for 2020 to seem very true for even 2013!  The first finding was that the mobile device will be the primary connection tool to the Internet for most people in the world by 2020 seems to be very true from my experience.  This article was written in 2008, when I first started working.  At that time, our company didn’t use smart phones as standard for sales personnel, but today, the iPhone is the standard issue phone for anyone who has a company phone.  More and more of our employees have company phones; it is not just the sales force.  With the increasing adoption of smart phones, it makes sense that these devices will be the primary connection to the Internet.  Also, in the Kelley connect week, I learned that in Kenya, although many citizens don’t have electricity, they do have cell phones.  With the Internet beginning to pervade these developing nations, smart phones will be cheaper and easier for these people to acquire than a desktop computer would be.  For developing nations for sure, the mobile device will be the primary connection to the Internet. 

The other finding I thought was interesting was that the division between personal time and work time will be erased.  In 2013, I’m definitely seeing this shift change.  As we become more connected, the concept of the 9-5 job is increasingly disappearing.  Working with international business, we need to have calls in the late evening to talk with colleagues in the Asia-Pacific region.  Now that I have a smartphone, I am always getting emails, work and personal, pushed to my phone, and when I see them, I feel the need to respond and address the issue immediately.  Even when I’m on vacation, I still check email and respond so when I get back to work, I’m not days behind.  On the flip side, if I get a notification to pay a bill while I’m at work, I pay it online right away instead of waiting until I’m home to pay it on my personal time.   With this division fading away, I think we will also see a rise in employees working offsite.